At Tesla,
Departures Mount at a Critical Time

Tesla
Inc.
is losing key personnel as it races to bring the Model 3 -- its most
critical electric sedan yet -- to market later this year.

Chief
Financial Officer Jason Wheeler’s impending departure, announced just
15 months after he joined Tesla from Google, will be the latest in a
raft of largely under-the-radar exits. Former executives, who spoke on
the condition they not be identified, cited a range of reasons for
their exits over the past year, including long hours in the rush to
high-volume production, mission creep, and a tense culture that
reflects their visionary but indefatigable chief executive officer,
Elon Musk.

“Tesla
looks like a company that is getting stretched to the limit,” said
Dave Sullivan, an analyst at industry researcher AutoPacific Inc. “The
pressure of getting out the Model 3 is getting to everybody, from the
people on the factory floor to the people at the top.”

A
Tesla spokesman in an emailed
statement
called attracting and retaining talent “one of our biggest assets” and
said the company’s attrition rate was below average among technology
companies.

Long
hours and job-hopping are routine at tech companies in California’s
Silicon Valley, and Palo Alto-based Tesla continues to make
high-profile hires. Even so, analysts have flagged the departures as a
risk to what will be Tesla’s most challenging execution year in its
short history. Musk plans to introduce the Model 3, is starting
battery production at the Gigafactory and will integrate SolarCity,
the recent acquisition that pushed Tesla’s global workforce to roughly
30,000 people.

Like
many companies, Tesla noted among risk factors in its just-filed
annual report that it needs to attract and retain skilled workers.
This year, however, it added a new phrase to the boilerplate, saying
the efforts are needed “especially to support our expansion plans and
ramp to high-volume manufacture of vehicles.”

Risk Factors

“Any
time you’re going through a big change it’s important to have
consistent management,” Colin Langan, a UBS analyst who has a sell rating on the stock, said in an interview.
“Jason Wheeler was a big hire and he’s leaving, and there have been
many other departures. If you’re putting out aggressive targets and
the people aren’t there to meet them, it’s a problem.”

Wheeler,
whose departure was first announced on last week’s quarterly earnings
call, said he wants to pursue work in public policy and praised what
he called the “A-team” at Tesla. Deepak Ahuja, the CFO who led Tesla
from the brink of bankruptcy through its 2010 initial public offering
and retired in 2015, will return in April for a second tour of duty.

Bloomberg
News compiled a list of more than two dozen management departures over
the past year that include vice presidents of finance, communications,
regulatory affairs, production, manufacturing, products and programs.
Recently, Tesla lost Mark Lipscomb, VP of human resources, and Satish
Jeyachandran, its director of hardware engineering.

Leadership Opacity

Tesla
is generally opaque about its leadership beyond Musk and Chief
Technical Officer J.B. Straubel, with no list of executives or vice
presidents on its website, its investor relations page or in the
annual report the company filed this week with the Securities and
Exchange Commission.

Among
Tesla’s senior leadership team, three quarters have more than three
years of tenure, 60 percent have been with the company at least six
years and 20 percent have worked there a decade, according to the
spokesman. Almost 60 percent of those who’ve had a leadership position
at Tesla over its 14-year existence are still with the company, Tesla
said.

None
of the former managers Bloomberg News reached agreed to speak on the
record.

Goldman
Sachs Group Inc. this week downgraded Tesla to sell from neutral, with
analyst David Tamberrino casting doubt on its ability to deliver the
Model 3 on time. The Feb. 27 report contributed to the shares dropping about 11 percent from their
19-month closing high of $280.98 on Feb. 14. Of 23 analysts tracked by
Bloomberg, eight have buy ratings on the shares, nine are neutral and
six recommend selling.

Tesla’s
shares have jumped about 29 percent over the past year and closed at
$251.57 Friday. Revenue surged 73 percent to more than $7 billion in
2016.

Recent Departures

When
Tesla announced in January it hired Chris Lattner from
Apple Inc. as vice president of Autopilot software, it didn’t mention
that Sterling Anderson, the executive who ran the entire Autopilot
program and reported directly to Musk, departed in late December.
Tesla then sued Anderson, alleging he broke his
confidentiality agreement with the company. Aurora Innovation LLC, the
company Anderson started with the former head of Google’s self-driving
project, said it would fight the “meritless” lawsuit.

Several
former Tesla employees have landed at other auto companies, including
Future Mobility Corp., Nio and Waymo, the self-driving car
business spun off by Google parent Alphabet
Inc.

To
be sure, Tesla’s clean-energy mission and compelling products has
attracted high-caliber people, regardless of its hard-driving
reputation. The 45-year-old Musk has described himself as a “nano
manager,” has kept a sleeping bag at the company’s car factory and
works a second job running a rocket company.

About
half of Musk’s roughly $11.6 billion in estimated wealth comes from
Tesla, where he takes no salary but is the largest shareholder with a
21 percent stake.

Growing Headcount

As
of Dec. 31, Tesla had about 17,800 employees, not counting another
12,200 added with the $2 billion acquisition of SolarCity last
year. Despite the growing headcount, more than 2,000 job postings at
Tesla are listed on the recruiting website Taleo.

Tesla
produced almost 84,000 vehicles in 2016 and plans to make half a
million in 2018, then 1 million in 2020. It expects to pick locations
for more gigafactories by the end of this year, and to introduce a
semi truck and bus. Earlier this week it was named the highest-ranked
domestic car brand by Consumer Reports magazine.

One
worker
at Tesla’s Fremont, California, auto plant touched off a
unionization effort last month, publishing a Medium post describing
60- to 70-hour work weeks, safety-related issues and mandatory
overtime.

The
unionization
talk has drawn pushback from Musk. He promised employees
free frozen yogurt stands, an electric pod-car roller coaster
connecting parking lots to the factory and a “really amazing party
once Model 3 reaches volume production later this year,” according
to an internal
email
Buzzfeed obtained
last month.

Musk’s
moves
to lighten the environment show the union threat has
registered, AutoPacific’s Sullivan said. “If Tesla has more than
2,000 job openings, does that mean that people are overloaded, or
doubling up? You can’t constantly ask for the impossible.”